WATCHING THE WORLD IMPASSE IN LIBYA

The hot seat between the Libyan and U.S. governments is one of the least enviable positions in the oil industry - and certainly one of the most frustrating.

Sitting in the seat at the moment are the three companies that made up the old Oasis group, one of the American operators that held extensive, valuable concessions in Libya before being forced out by U.S. government sanctions.

Representatives of the companies - Marathon Oil Co., Conoco Inc., and Amerada Hess Corp. - will meet with executives from Libya's National Oil Co. (NOC) in Rome this month in yet another attempt to talk their way back into their former producing operations.

But with the U.S. seemingly unwilling to make new concessions after softening its stance on sanctions at the beginning of 1989, there seems little hope that any constructive proposals will emerge from the meeting.

HOW IT BEGAN

Problems started back in 1986 when the U.S. government imposed a raft of sanctions against Libya that forced all U.S. companies to withdraw from operations there.

The sanctions prevented U.S. employees from working in Libya, blocked new investment by concession holders, banned the export of American made oil field equipment to Libya, and prohibited the export of Libyan crude to the U.S.

Libyan reaction was remarkably restrained. Realizing that members of the Oasis group, Occidental Petroleum, and W.R. Grace, which also have interests in the North African state, were tied by the government edict, Libya offered a 3 year suspension of the oil companies' operations.

NOC took over operation of oil fields, changed the Oasis name to Waha Oil Co., and marketed the U.S. companies' share of production on its own account. The deal was designed to maintain the U.S. companies' interests until the administration in Washington took a more benevolent view of Libya.

At the beginning of last year the situation changed. But it didn't change enough to allow normal relations to be resumed between U.S. companies and Libya.

Companies were told by Washington they could resume operations in Libya if non-U.S. subsidiaries were used and oil exports went to non-U.S. destinations.

But from Libya's viewpoint the deal was unsatisfactory. There were still some financial restrictions, and the ban on supply of U.S. made equipment and shipment of crude to the U.S. remained in force.

In the meantime, the 3 year deal that kept operations in a state of suspended animation expired.

NO MOVEMENT SEEN

Agreements with Oxy and Grace contained a clause that kept the pacts evergreen if a change of heart in Washington was not forthcoming.

The Oasis group had no such evergreen clause and now appears to be in a state of limbo.

The U.S. State Department says no new policy on sanctions is on the horizon.

The American companies several times have suggested to NOC a return on Washington's terms, only to be told by Libya that without U.S. equipment and U.S. destinations for exports there will be no deal.